White House threatens estate tax repeal veto

The Obama administration threatened to veto the House GOP plan to repeal the estate this week, calling the proposal a handout to the richest of the rich.

In a statement, the administration said that the measure would affect only about one or two of every thousand estates, with the average tax break for those heirs averaging more than $3 million. Administration officials insisted the measure would only make the country’s problems with income inequality worse, hitting a topic that could be important to the 2016 presidential race.

{mosads}Repealing the estate tax, the administration said, would “shift a greater share of the tax burden onto working Americans at a time when the top one percent already holds more than 40 percent of the Nation’s wealth and wealth disparities have risen to levels not seen since the 1930s.”

The House GOP measure would cost $270 billion over a decade, leading the administration to knock Republicans for being fiscally irresponsible. The White House also noted that the recent House GOP budget relied on estate tax revenues. It’s unlikely to make it to President Obama’s desk — a nonbinding repeal vote got the vote of 54 senators last month. 

Republicans have said the estate tax is a punitive measure aimed at the successful, who pay taxes as they grow a business or a farm only to have their heirs be hit with another tax when they die.

Separately, the administration also threatened to veto a measure that would indefinitely extend the tax deduction for state and local sales taxes, a measure that would cost $42 billion over a decade. Taxpayers have generally been allowed to choose between deducting their state income or sales taxes in recent years, making the incentive especially important to states like Texas and Washington that don’t have an income tax.

In threatening to veto the estate tax repeal proposal, the administration said Republicans had only built upon a temporary estate tax repeal enacted in 2001. The new GOP bill would allow heirs to escape some capital gains taxes on their relatives’ assets that gained value.